TokyoTom on Roger Pielke Jr.'s Prometheus asks me some questions about a tax on fuels that emit CO2.
1)
“Is the atmosphere an unowned, open access common
resource?”
In
general, yes. There are exceptions, but let’s not talk about them for
now.
2)
“While wealth is created by private economic transactions, if an unregulated
good is used as part of the economic process, is some public wealth also
destroyed?”
It
depends. When the unregulated good is “used,” is its value somehow lost? A
great example of this is RP Jr.’s fave rave, using big scrubbers to suck CO2 out
of the air. Such plants have at least the *potential* for killing or seriously
stunting the growth of vegetation downwind. In that case, the air downwind
would be seriously degraded from the viewpoint of a farmer (for example). In
that case, the farmer’s wealth WOULD be destroyed. Another case would be using
groundwater, and discharging the used water to the surface (where only a small
fraction would find its way back to the water table). But I don’t see any
closely similar mechanism applying to CO2. First of all, no one is made sick
or has their property directly
damaged by CO2. Second, we aren’t even generally talking about damages
occurring at present; we’re talking about hypothetical damages occurring in the
fairly distant future (e.g. more than 30 years from
now).
3)
“Do market prices the cost of release of GHGs dumping at
$0?”
Not
entirely. For example, landfills generate a lot of methane. That methane can
be used to generate electric power, or to heat buildings. So there’s an
opportunity cost to releasing that methane, instead of using it to generate
generating electrical power or heat buildings. Similarly, if someone drives a
gas-guzzling car, that car costs more to refuel than a more fuel-efficient car.
That effectively puts a cost on the CO2 emitted.
4)
“Does the absence of a market signal tend to encourage economic behavior that
has destructive aspects, because actors have no incentive to rationalize their
use of the resource or to take into account damages that may result to others
from such activity?”
Yes,
but I don’t agree the market signal is completely absent. Plus, from the point
of view of future generations, I think the damages will be trivial (see
following answers).
5)
“Is this similar to a subsidy of current consumption taken from future
generations, extracted by means of impoverishing ‘unowned’ common
resources?”
Oh,
my. First, I don’t agree the resource is “impoverished.” Air with 600 ppm of
CO2 in it is not (significantly) less valuable than air with 300 ppm CO2.
Second, the “taken from future generations is important.” Let me give
illustrations:
Suppose
your grandparents had borrowed money before you were born, which you had to
repay (at no interest…just the amount of the debt)? Would you say that was
wrong? What if they borrowed 2x your current salary, and spent it all on
renting 100 berths (for their pets) aboard the Titanic? That would clearly be
wrong! But what if they’d borrowed $300 so your grandmother to could come to
America
from the mother
country, Russia
, to marry your grandfather?
Would that be wrong? Or suppose they’d “merely” spent it on several months
rent during the Depression…would that be wrong? Further, suppose when they
died, their estate was worth $1000, and you got the debt of $300, but also got a
quarter of the estate…or all of the estate? Would that be
wrong?
6)
“Are there true costs to using the global commons in this way? In looking at
this, please consider the conclusion that there is a discernible climate change
and a discernable human fingerprint on it, that temps have only risen one
degree, but climate sensitivity appears to be about 5+ F in the event of a
doubling. Besides considering the costs imposed by climate change through its
ecological effects, direct damage to human assets and activities and possible
benefits, please also consider the costs of adapting infrastructure to the
changes. Consider both costs already felt and those that can be anticipated and
discounted.”
First,
I have somewhat different numbers that I want to submit as the “true” numbers:
a) The warming from 1885 to 2005 is almost exactly 1 deg C…so that’s 1.8 deg F. b) I think the future warming has a 50/50 chance of being less than 1.5 deg
C…so that’s future warming of 2.7 deg F. But I’m just pointing that out because
I’m a geek, and spent a fair amount of my time determining the warming for
2100.
But
whatever. Let’s say that the damage from the future warming has a present value
of $3 trillion (year 2005 dollars). Let’s further assume 2% inflation
throughout the rest of the century (true inflation is much lower, but let’s
ignore that fact). Therefore, the value of the damage in year 2100 dollars is:
$3 trillion x 1.02^95 = ~$20 trillion. (Give or
take.)
Have
we done something bad? Well, let’s start by assuming that all the temperature
rise in 2100 is all *our*
fault…that the rise in 2070, 2080, 2090 is not at all caused by the people in
2100. All of the people in 2100 are completely blameless for any of the temperature rise. Have we done something bad,
sticking them with a $20 trillion debt? Well, just like the grandparents’ debt
scenario, the answer would be “it depends.” First, how rich are people in
2100? My answer is: “They will be so rich it is almost inconceivable today.”
The world GDP in 2000 was approximately $45 trillion (year 2000 dollars). I’m
predicting that the world GDP in 2100 will be approximately $80 QUADRILLION (year
2000 dollars).
7)
“In the absence of a pricing mechanism (via private ownership of emission
permits, taxation or other device) that values the use of the atmosphere as a
GHG dump, what market incentives do fossil fuel providers or consumers have to
move to new technologies that economize on GHG
emissions?”
As
I already mentioned, Japan, the EU, China, India, the U.S….we ALL have an
incentive to move away from: a) coal, because it emits so many *conventional* pollutants (e.g. SO2,
particulates, NOx, mercury, etc.), b) oil, because it costs so much, and because
the revenues go governments like those in Saudi Arabia and Iran.
8)
“Presumably you have no problem with purely private transactions between
economic actors involving resources and products owned by them; neither do I, so
long as I can also sue for any damages they might cause me. But the
externalities associated with certain behaviors has led to regulation, including
establishing private property rights in the case of SO2 emissions. What is so
conceptually different about establishing similar transferrable property rights
in GHJG emissions?”
The
huge conceptual difference is that SO2 emissions cause easily identifiable
damage to human health (e.g., through conversion to sulfate particles) and
property (e.g. through acid rain) right now. You’re talking about CO2 which we
THINK may cause damage (above the benefits) sometime in the future.
Do
you really want to reduce CO2 emissions as much as possible, at the lowest
possible cost? Well, rather than setting up a tax, and then hoping it will lead
to lower emissions (even though a simple market analysis will show that any
realistic tax will result in virtually no emission reduction) you should instead
be advocating for much more aggressive funding of research into non-CO2 emitting
technologies.
a) Do
you know what the U.S. government funding is for non-tokamak fusion? I don’t
know the exact number, but I do know for certain that it’s under $10 million per
year. And probably even under $1 million year.
b) Do
you know what federal funding for photovoltaics is? I do know that…it’s $64
million per year.
If
the U.S. government simply borrowed $10 billion (with a current debt of over $8
trillion, no one will even notice it), and spent $5 billion on non-tokamak
fusion research and $5 billion on photovoltaics, it would probably do a LOT more
to reduce worldwide emissions of CO2 in the 21st century than raising
the price of gasoline by $0.50 cents a gallon (at an ANNUAL cost of $65 billion)
will ever do. And if they spent a full $65 billion (one year of gasoline tax)
on non-tokamak fusion and photovoltaics, they’d almost certainly develop those
two technologies to a point where no one in the world would need to burn fossil
fuels for energy.
Robert Samuelson was right about global warming ("The Real Inconvenient Truth About Global Warming"). The real solution to global warming is to develop energy technologies that don't emit CO2 that people actually PREFER to existing energy technologies, because the new technologies are cheaper and better than existing technologies.
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